ALJDEC decisions subject to certification as final

13F-DI-260-REL · Department of Real Estate · 2014-07-01

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: June 16, 2014 APPEARANCES: Ursula H. Gordwin, Esq. represented Respondent Alexander Aunon. Assistant Attorney General Liane C. Kido represented the Arizona Department of Real Estate. ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella _____________________________________________________________________ FINDINGS OF FACT 1. The Arizona Department of Real Estate (the “Department”) is the duly constituted authority for licensing and regulating the practice of real estate in the State of Arizona. 2. On February 10, 2006, the Department issued real estate salesperson’s license number SA572308000 to Alexander Aunon (“Mr. Aunon”). See Exhibit 1. That license expired on February 28, 2014. Id. 3. At all times material to this matter, Mr. Aunon was employed as a salesperson for Realty Executives Tucson Elite, holder of entity license number LC640973000. John Murtaugh III (“Mr. Murtaugh”), holder of license number BR017128000, was the Designated Broker for Realty Executives Tucson Elite. 4. Wendy Greenwood, Senior Investigator for the Department, testified that on or about January 7, 2013, the Department received a written complaint about Mr. Aunon from Mr. Murtaugh. See Exhibit 2. In the written complaint, Mr. Murtaugh stated that he was contacted telephonically on January 2, 2013, by Marla Miller and John Dennis (“Clients”) regarding their dissatisfaction with Mr. Aunon in the representation of a short sale listing and property management of the property for which the short sale was pending (“Property”). Id. The complaint further advised that the Property did not sell and was scheduled for a trustee sale. Id. The Clients informed Mr. Murtaugh that the tenant of the Property had not paid the December rent in the amount of $850.00. Id. 5. Mr. Murtaugh informed the Department in the written complaint that he was not familiar with the address of the Property, but found the Property listed in the Multiple Listing Service. Id. The brokerage did not have a file for the listing or a lease/property management agreement for the Property. Id. Mr. Murtaugh stated that he was unaware of the existence of the lease and that no documents were turned in to him or the company regarding the Property as required by the company’s Policy and Procedure Manual. Id. 6. Mr. Murtaugh immediately met with Mr. Aunon regarding the Clients’ complaint. Mr. Aunon brought the file to Mr. Murtaugh at Mr. Murtaugh’s request, and inside the file was an envelope containing $850.00 cash that Mr. Aunon was holding as the security deposit for the lease of the Property. Id. According to Mr. Murtaugh’s written complaint, Mr. Aunon “collected rents, and deposited them into his personal account, and sent the balance after taking out management fees of $85.00 per month.” Id. Mr. Aunon admitted to Mr. Murtaugh that he committed an “ADRE violation” in that he “commingled funds with [his] personal funds.” The Property Management Agreement was not signed by Mr. Murtaugh, nor was it signed by Mr. Aunon. See Exhibit 5b. 7. Mr. Murtaugh had Mr. Aunon write a check for $340.00 to John Dennis to reimburse the property management fees that Mr. Aunon had received (calculated at $85.00 per month for four months). See Exhibit 3. Mr. Murtaugh took the $850.00 cash security deposit, obtained a cashiers check, and sent the Clients the check. See Exhibit 4. 8. Mr. Murtaugh concluded that Mr. Aunon had conducted his real estate activities regarding the short sale in a proper manner “other than not turning in the employment agreement” in a timely manner. See Exhibit 2. There had been no offers on the property. Id. 9. Mr. Murtaugh severed Mr. Aunon’s license from Mr. Murtaugh’s broker’s license. Id. Mr. Murtaugh concluded his written complaint against Mr. Aunon by stating: All agents in the company were told last year that only the designated property managers could due [sic] property management, in accordance with our Policy and Procedure manual, and that all documents must be turned in a timely fashion. Mr. Aunon said that he did not like being told what to do, so he went rouge [sic], and decided he did not need to follow our rules, or the laws set forth by ADRE.”

Id. 10. Ms. Greenwood testified that on or about January 18, 2013, the Department received additional correspondence from Mr. Murtaugh advising that Mr. Dennis informed him that Mr. Aunon had put a stop payment on the personal check in the amount of $340.00 representing the return of the property management fees. See Exhibit 6. Included with the January 18, 2013 letter from Mr. Murtaugh was a copy of a receipt entitled “Statement” dated December 3, 2012, which was addressed to the tenant of the Property. See Exhibit 6a. The Statement reflects that Mr. Aunon received rent from the tenant and a balance due of $0.00. Id. However, also included was a copy of a “Five-Day Notice to Pay or Quit” dated December 15, 2012, which Mr. Aunon issued to the tenant for nonpayment of rent. See Exhibit 5a. Mr. Murtaugh wrote in his letter that “[i]t was my determination that Mr. Aunon took Mr. Dennis[‘] December 2012 rent money, and never gave it to Mr. Dennis.” See Exhibit 6. Text message correspondence between Mr. Aunon and Marla Miller on December 26, 2012, evidences that as of that date, the Clients still had not received the December 2012 rent payment. See Exhibit 7.

11. Mr. Murtaugh sent Mr. Dennis two cashiers checks, one for $340.00 representing the check for reimbursement of property management fees for which payment had been stopped by Mr. Aunon, and one for $850.00, representing the December 2012 rent that was collected. See Exhibits 6B and 6C. 12. Mr. Aunon did not testify at hearing on the advice of counsel. However, in his written response to the Department, he acknowledged reading the complaint and stated that he has “been railroaded into this. A bunch of con artist.” See Exhibit 8. Mr. Aunon makes reference to his feeling that “nobody . . . cared about the tenant.” Id. Mr. Aunon stated that he transferred all property management accounts to Mr. Murtaugh upon his severance, and that he “had a system that worked.” Id. Mr. Aunon addressed the security deposit issue by stating, “I had a feeling the landlord would not relocate the tenant, so I was hoping we could use that for relocation. But Mr. Murtaugh returned it to the landlord.” Id. Mr. Aunon concluded his written response by stating, “[i]n regards to my fees, I earned my 10% PM fee’s [sic] fair and square.” Id. 13. Mr. Aunon’s counsel argued that the rent receipt dated December 3, 2012, could have been for November’s rent. However, no evidence was presented to establish such contention. Mr. Aunon’s counsel further argued that it would have been unreasonable for Mr. Aunon to serve the tenant with an eviction notice if the tenant had in fact paid December’s rent. CONCLUSIONS OF LAW 1. Pursuant to A.R.S. Title 32, Chapter 20, the Department has the authority and duty to regulate all persons engaged in the business of, or acting in the capacity of, a real estate broker or salesperson, and to enforce all statutes, rules, and regulations relating to real estate. Because this matter is disciplinary in nature, the Department bears the burden of proof. The standard of proof on all issues is by a preponderance of the evidence. See A.A.C. R2-19-119. 2. A preponderance of the evidence is “such proof as convinces the trier of fact that the contention is more probably true than not.” MORRIS K. UDALL, Arizona Law of Evidence § 5 (1960). It is “[e]vidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.” Black’s Law Dictionary 1182 (6th ed. 1990). 3. Pursuant to A.R.S. § 32-2153(A)(1), the Commissioner may suspend or revoke a license if the licensee “[p]ursued a course of misrepresentation or made false promises, either directly or through others, whether acting in the role of a licensee or a principal in a transaction.” The evidence of record established that Mr. Aunon led the Clients to believe that the property management agreement was through the brokerage, Realty Executives Tucson Elite, when in fact, Mr. Murtaugh knew nothing of the existence of the listing or of the property management agreement. Mr. Aunon failed to remit rent monies received and did not deposit the security deposit into a trust account. Further, Mr. Aunon issued an eviction notice to the tenant notwithstanding having received the rent for that month. These actions by Mr. Aunon constitute direct misrepresentations while acting in the role of a licensee, thereby violating A.R.S. § 32-2153(A)(1). 4. Pursuant to A.R.S. § 32-2153(A)(7), the Commissioner may suspend or revoke a license if the licensee “[a]ccepted compensation as a licensee for the performance of any of the acts specified in this chapter from any person other than the licensed broker to whom the licensee is licensed, the licensed professional corporation of which the licensee is an officer and shareholder or the licensed professional limited liability company of which the licensee is a member or manager.” Mr. Aunon accepted compensation personally in the form of commission for property management services that he did not have the authority to conduct, thereby violating A.R.S. § 32- 2153(A)(7). 5. Pursuant to A.R.S. § 32-2153(A)(9), the Commissioner may suspend or revoke a license if the licensee “[f]ailed, within a reasonable time, to account for or to remit any monies, to surrender to the rightful owner any documents or other valuable property coming into the licensee's possession and that belongs to others . . . .” Mr. Aunon failed to remit the December 2012 rent that was paid on December 3, 2012, to the Clients, compelling Mr. Murtaugh to pay the Clients the $850.00 rental amount from the brokerage account. Such failure by Mr. Aunon violates A.R.S. § 32-2153(A)(9). 6. Pursuant to A.R.S. § 32-2153(A)(16), the Commissioner may suspend or revoke a license if the licensee “[c]ommingled the money or other property of the licensee's principal or client with the licensee's own or converted that money or property to the licensee or another.” In this case, Mr. Aunon acknowledged that he commingled the Clients’ money with his personal funds and he converted the December 2012 rent when he failed to remit it to the Clients. Therefore, the preponderance of the evidence establishes that Mr. Aunon violated A.R.S. § 32-2153(A)(16). 7. Pursuant to A.R.S. §32-2153(B)(7), the Commissioner may suspend or revoke a license if the licensee has “[n]ot shown that the holder or applicant is a person of honesty, truthfulness and good character.” A.A.C. R4-28-1101(A) provides that “[a] licensee owes a fiduciary duty to the client and shall protect and promote the client’s interests. The licensee shall also deal fairly with all other parties to a transaction.” Mr. Aunon’s actions of failing to remit the December 2012 rent to the Clients and issuing an eviction notice to the tenant notwithstanding having received that rental payment, demonstrate dishonesty and a failure to uphold his fiduciary responsibility to the Clients. Mr. Aunon failed to present any mitigating evidence. Instead, his counsel argued a lack of intent, no prior discipline, poor judgment, Mr. Aunon’s acknowledgment of his mistake of engaging in property management without the authority to do so, and the lack of substantial pecuniary gain for Mr. Aunon. These factors do not negate Mr. Aunon’s actions, and Mr. Aunon’s written response to Mr. Murtaugh’s complaint does not demonstrate remorse for his dishonest actions. 8. Pursuant to A.R.S. §32-2153(B)(8), the Commissioner may suspend or revoke a license if the licensee demonstrated “incompetence to perform any duty or requirement of a licensee under or arising from this chapter. For the purposes of this paragraph, "incompetence" means a lack of basic knowledge or skill appropriate to the type of license the person holds or a failure to appreciate the probable consequences of the licensee's action or inaction.” Mr. Aunon demonstrated incompetence when he engaged in property management without conducting such services through his employing brokerage, when he maintained the cash security deposit in the file rather than depositing it into the brokerage’s trust account, when he failed to remit the December 2012 rent to the Clients, and when he issued an eviction notice to the tenant notwithstanding having received the rent for that month. 9. Pursuant to A.R.S. § 32-2153(A)(3), the Commissioner may suspend or revoke a license if the licensee has “disregarded or violated any of the provisions of this chapter or any rules adopted by the commissioner.” Based on the above-found violations of the provisions of Title 32, Chapter of the Arizona Revised Statutes, Mr. Aunon has also violated A.R.S. § 32- 2153(A)(3). 10. Pursuant to A.R.S. § 32-2160.01, the Department may impose a civil penalty not to exceed $1,000.00 per violation for each violation of Title 32, Chapter 20. 11. The Administrative Law Judge concludes that the Department met its burden of proving by a preponderance of the evidence that grounds exist to discipline Mr. Aunon’s real estate salesperson’s license. The Administrative Law Judge concludes based upon the above-found violations of law that the appropriate discipline in this matter is the revocation of Mr. Aunon’s real estate salesperson’s license and the imposition of a $5,000.00 civil penalty, as violations of A.R.S. §32-2153(B)(7) and A.R.S. § 32- 2153(A)(3) are accounted for within the other delineated violations. ORDER On the effective date of the Order entered in this matter, Mr. Aunon’s real estate salesperson’s license shall be revoked. Within ninety (90) days of the effective date of the Order entered in this matter, Mr. Aunon shall pay to the Department a civil penalty in the amount of $5,000.00, and such payment shall be made by cashier’s check or money order made payable to the Department.

In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order will be five (5) days from the date of that certification.

Done this day, July 1, 2014.

/s/ Sondra J. Vanella Administrative Law Judge

Transmitted electronically to:

Judy Lowe, Commissioner Arizona Department of Real Estate -----------------------

Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826